Monday, March 10, 2008

Income is not income

Money: A song written by Berry Gordy, first recorded by Barrett Strong, then a bit later by a British band called the Beatles.

But income is not income. If you check the results of the Census/ACS and BEA for similar time frames, you'll see two different definitions of income. The Census/ACS definition is MONEY income. BEA measures PERSONAL income.

Data Detective Lenny explains:Money income is essentially gross cash received on a regular basis (inheritence, etc. are not included). So wages and salaries are measured before taxes are removed.

According to the BEA web site: Personal Income is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements to wages and salaries, proprietors' income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.

The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.

This includes such income as housing subsidies, Medicare/Medicaid payments to hospitals on behalf of individuals, etc. even though the individual does not personally see it. The idea is that this is money supporting individuals. So the BEA figures will be significantly different ($10k higher) then the Census Bureau's.

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